TMI BlogAPPROVED PROVIDENT FUNDS, APPROVED SUPERANNUATION FUNDS, APPROVED GRATUITY FUNDSX X X X Extracts X X X X X X X X Extracts X X X X ..... be affected by the fact that the fund is subsequently amalgamated with another provident fund on the occurrence of an amalgamation of these undertakings in connection with which the two funds are maintained, or that it subsequently absorbs the whole or a part of another provident fund belonging to any undertaking which is wholly or in part transferred to or merged in the undertaking of the employer maintaining the first-mentioned fund. Conditions to be satisfied by approved provident funds. 3. In order that a provident fund may receive and retain approval, it shall, subject to the provisions of paragraph 4, satisfy the conditions set out below and any other conditions which the Board may, by rules, specify— (a) all employees shall be employed in India, or shall be employed by an employer whose principal place of business is in India; (b) the contributions of an employee in any year shall be a definite proportion of his salary for that year, and shall be deducted by the employer from the employee's salary in that proportion, at each periodical payment of such salary in that year, and credited to the employee's individual account in the fund; (c) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a does not exceed ten per cent. (2) Notwithstanding anything contained in clause (b) of paragraph 3, an employee who retains his employment while serving in the armed forces of the Union or when taken into or employed in the national service under any law for the time being in force, may, whether he receives from the employer any salary or not, contribute to the fund during his service in the armed forces of the union or while so taken into or employed in the national service a sum not exceeding the amount he would have contributed had he continued to serve the employer. (3) Notwithstanding anything contained in clause (e) or clause (h) of paragraph 3 — (a) at the request made in writing by the employee who ceases to be an employee of the employer maintaining the fund, the trustees of the fund may consent to retain the whole or any part of the accumulated balance due to the employee to be drawn by him at any time on demand; (b) where the accumulated balance due to an employee who has ceased to be an employee is retained in the fund in accordance with clause (a), the fund may consist also of interest in respect of such accumulated balance. (c) the fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear, be entitled to a deduction in the computation of his total income of an amount determined in accordance with section 69. Exclusion from total income of accumulated balance. 7. (1) The accumulated balance due and becoming payable to an employee participating in an approved provident fund shall be excluded from the computation of his total income— (a) if he has rendered continuous service with his employer for a period of five years or more; (b) if, though he has not rendered such continuous service, the service has been terminated by reason of the employee's ill-health, or by the contraction of discontinuance of the employee's business or other cause beyond the control of the employee; or (c) if, on the cessation of his employment, the employee obtains employment with any other employer, to extend the accumulated balance due and becoming payable to him is transferred to his individual account in any approved provident fund maintained by such other employer. (2) Where the accumulated balance due and becoming payable to an employee participating in an approved provident fund maintained by his employer includes any amount transferred from his i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und on the date on which the approval of the fund takes effect, and sub-paragraph (4) of this paragraph and subparagraph (5) of paragraph 4 shall apply thereto. (3) Any portion of the balance to the credit of an employee in the existing fund which is not transferred to the approved fund shall be excluded from the accounts of the approved fund and shall be liable to income-tax in accordance with the provisions of this Code, other than this Part. (4) Subject to such rules as the Board may make in this behalf, the Assessing Officer shall make a calculation of the aggregate of all sums comprised in a transferred balance which would have been liable to income-tax if this Part had been in force from the date of the institution of the fund, without regard to any tax which may have been paid on any sum, and such aggregate (if any) shall be deemed to be income received by the employee in the financial year in which the approval of the fund takes effect and shall be included in the total income of the employee for that financial year, and, for the purposes of assessment, the remainder of the transferred balance shall be disregarded, but no other exemption or relief, by way of refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, namely:— (i) the Provident Funds Act, 1925; (ii) the Public Provident Fund Act, 1968; (iii) the Employees Provident Funds and Miscellaneous Provisions Act, 1952; (iv) the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 and such provident fund shal be deemed to be an approved provident fund if it is notified by the Board in accordance with the guidelines framed by the Central Government in this behalf. Provisions relating to rules. 15. The Board may, for the purposes of this Part, prescribe:— (a) the statements and other information to be submitted along with an application for approval; (b) limiting the contributions to an approved provident fund by employees of a company who are shareholders in the company; (c) regulating the investment or deposit or the moneys of an approved provident fund; (d) providing for the assessment by way of penalty of any consideration received by an employee for an assignment of, or creation of a charge upon, his beneficial interest in an approved provident fund; (e) determining the extend to and the manner in which exemption from payment of tax may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... draw such approval, if in his opinion, the circumstances of the fund or part cease to warrant the continuance of the approval. (2) The Commissioner shall communicate in writing to the trustee of the fund the grant of approval with the date on which the approval is to take effect, and, where the approval is granted subject to conditions, those conditions. (3) The Commissioner shall communicate in writing to the trustees of the fund any withdrawal of approval with the reasons for such withdrawal and the date on which the withdrawal is to take effect. (4) The Commissioner shall neither refuse nor withdraw approval to any superannuation fund or any part of a superannuation fund unless he has given the trustees or that fund an opportunity of being heard in the matter. Conditions for approval. 2. In order that a superannuation fund may receive and retain approval, it shall satisfy the conditions set out below and any other conditions which the Board may by rule prescribe— (a) the fund shall be a fund established under an irrevocable trust in connection with a trade or undertaking carried on in India, and not less than ninety per cent. of the employees shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in circumstances other than those referred to in paragraph 13 of the Sixth Schedule, tax on the amounts so paid shall be deducted at the average rate of tax at which the employee was liable to tax during the preceding three years or during the period, if less than three years, when he was a member of the fund, and shall be paid by the trustees to the credit of the Central Government within the time and such manner as the Board may direct. Deduction from pay of and contributions on behalf of employee to be included in return. 6. Where an employer deducts from the emoluments paid to an employee or pays on his behalf any contributions of that employee to an approved superannuation fund, he shall include all such deductions or payments in the return which he is required to furnish under section 198. Appeals. 7. (1) An employer objecting to an order of the Commissioner refusing to accord approval to a superannuation fund of an order withdrawing such approval may appeal, within a period of sixty days of such order, to the Board. (2) The appeal shall be in such form verified in the manner and accompanied by such fees as the Board may prescribe. Liability of trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etations in this Part. 11. In this Part, unless the context otherwise requires, "employer", "employee", "contribution" and "salary" shall have, in relation to superannuation funds, the meaning respectively assigned to them in paragraph 15 of Part I in relation to provident funds. PART III APPROVED GRATUITY FUNDS Approval of gratuity fund and its withdrawal. 1. (1) The Commissioner may accord approval to any gratuity fund which, in his opinion, complies with the requirements of paragraph 2, and may at any time withdraw such approval if, in his opinion, the circumstances of the fund or part cease to warrant the continuance of the approval. (2) The Commissioner shall communicate in writing to the trustee of the fund the grant of approval with the date on which the approval is to take effect, and, where the approval is granted subject to conditions, those conditions. (3) The Commissioner shall communicate in writing to the trustees of the fund any withdrawal of approval with the reasons for such withdrawal and the date on which the withdrawal is to take effect. (4) The Commissioner shall neither refuse nor withdraw approval to any gratuity fund unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid to an employee during his lifetime, the gratuity shall be treated as salary paid to the employee for the purpose of this Code. Liability of trustees on cessation of approval. 5. If a gratuity fund for any reason ceases to be an approved gratuity fund, the trustees of the fund shall nevertheless remain liable to tax on any gratuity paid to any employee. Contributions by employer, when deemed to be income of employer. 6. Where any contributions by an employer (including the interest thereon, if any) are repaid to the employer, the amount so repaid shall be deemed for the purposes of income-tax to be the income of the employer of the financial year in which they are so repaid. Appeals. 7. (1) An employer objecting to an order of the Commissioner refusing to accord approval to a gratuity fund or an order withdrawing such approval may appeal, within a period of sixty days of such order, to the Board; (2) The appeal shall be in such form, verified in the manner and accompanied by such fee as the Board may prescribe. Particulars to be furnished in respect of gratuity funds. 8. The trustees of an approved gratuity fund and any employer who contri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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